ISLAMABAD: Minority shareholders of Shell Pakistan, a leading international oil marketing company (OMC), have alleged that they were unfairly treated in the recent deal with Saudi Wafi Energy, incurring substantial financial losses. They also criticised the corporate sector regulator for facilitating the transaction by introducing enabling regulations that benefited two foreign firms just before the deal.

Some of the minority shareholders have formally written to Shell Pakistan — a subsidiary of UK’s Shell Plc — and the Securities and Exchange Commission of Pakistan (SECP) to complain that around 77.4 per cent of Shell Pakistan shares were sold to Wafi Energy without any price evaluation and at a share price significantly lower than two other bids available on the table.

While Shell declined to respond to specific questions and chose to defend in generic terms its sale deal with Wafi within “regulatory requirements”, the SECP denied it had received any complaint from shareholders and that deal was struck by a UK-based company. It said the changes to the relevant law were put in place in line with international best practices and six months before the said transaction.

Some minority shareholders Dawn spoke to said the 77.42pc shares of Shell Pakistan Limited (SPL) to Wafi Energy were settled at $97 million along with $50m cash, making the net price at $47m. The price was set at Rs118 per share.

Accuse regulator of favouring two foreign companies just before the agreement

They said two other consortia offered a bid price of Rs190 and Rs220 per share, respectively. Both were not entertained, raising questions if part of the deal was done outside Pakistan.

In comparison, relatively small and local firm GO Petroleum’s 40pc shares were acquired by Aramco at $80m, taking its valuation to $200m.

There could always be questions over bid price in such matters. In the interest of shareholders, section (e) of the regulation 13 of Listed Companies (substantial acquisition of voting shares and takeover) Regulations 2017 provided for third-party revaluation for price discovery to address any concerns. The said clause was removed by the SECP in January this year.

Now, Wafi Energy has started the process for takeover of around 13pc more stakes in Shell to qualify for delisting its shares from the stock market. It has already offered Rs155 per share to minority shareholders to acquire 11.29pc shares with a deadline this week.

Dawn reached out to Shell Pakistan to confirm if it had really received higher bids which it did not accept to the disadvantage of minority shareholders, whether it made sufficient public disclosure about the bid process, whether or not part of the transaction was settled outside Pakistan and if it received/addressed shareholder complaints.

In response, a Singapore-based Shell spokesperson said the sale of majority shareholding in SPL was “in line with Shell Group’s strategy and Capital Markets Day commitments to high grade its mobility network and is a demonstration of our enhanced focus on performance, discipline, and simplification. The sales agreement followed a targeted sales process, and after consideration Shell selected Wafi Energy as the right buyer, given Wafi Energy’s strategy to expand in the region and its commitment to building upon SPL’s existing legacy”.

“The sales process is following all regulatory requirements including those of the Securities and Exchange Commission of Pakistan and the Pakistan Stock Exchange,” it added.

Responding to similar questions, the SECP denied it had received any complaint from SPL shareholders with respect to offer price in the ongoing acquisition by WAFI Energy Holdings Limited. In addition, the sale/pur­chase agreement for 77.42pc shares was signed by Shell Petroleum Company Ltd “which is a UK-based entity” rather than SPL — the Pakistan subsidiary.

About removal of regulator clause for third-party revaluation, the SECP said the amendments along with 13 others were made in line with the best international practices and after thorough consultation with the market participants — the consultation process lasted between October 2023 and January 24, 2024. The SPL public offer followed six months later, it added.

Interestingly, a copy of one complaint from a minority shareholder is available with Dawn and is addressed to not only the SECP chairman but also to Pakistan Stock Exchange Chairperson Dr Shamshad Akhtar and few others.

Published in Dawn, September 20th, 2024